Ann: Operations Update, page-3

AXP Energy Limited (ASX: AXP, OTC US: AUNXF),(‘AXP’, ‘Company’ is pleased to provide this
update to shareholders on progress in the current quarter.
IMPROVED FIRM GAS CONTRACT PRICING
AXP has leveraged the strength in recent spot gas prices to roll forward existing, lower-priced
supply agreements with one of its major customers to secure a 41% increase in pricing for
volumes which represent a significant portion of its daily production.
Under the new arrangements, a new price of $5.446/dth (up from $3.841/dth) will be payable
by the buyer with respect to the supply of:
• 5,000 dekatherms1 (dth) per day (up from previous volume of 4,000 dth per day) from 1
May through to 31 October 2022; and
• 3,000 dth per day from 1 November 2022 to 31 March 2023.
This new gas price reflects strengthening US spot prices and a desire for customers to lock in
firm pricing and volumes ahead of delivery. Although the Company has committed an
additional firm volume of 1,000 dth/day for the period to 31 October 2022, it maintains flexibility
to capture sales at higher spot prices on its uncontracted volumes.
The new pricing represents an important step in AXP improving margins and taking advantage
of favourable commodity prices in the US. It also locks in firm sales over the warmer months,
typically a softer pricing period, at pricing set with reference to current high spot prices.
NEW GAS PRODUCTION LINKED TO RELIABLE MIDSTREAM AND DOWNSTREAM INFRASTRUCTURE
As per the most recent Quarterly Activities Report, AXP’s focus is on growing production in
leases tied into more reliable gas transport and processing infrastructure. Approximately 26%
of AXP’s daily gas production (or ~1,481 Mcf/day2 ) comes from leases tied into such
infrastructure. So far this month an additional ~250 mcf/day of gas has already been added
from tie-ins and workovers on 9 wells conducted this quarter by the Company’s internal
workovers team. This represents a ~17% increase in daily production from these leases, from
only a small number of wells.
As a result, daily production has increased to an average of ~1,731 Mcf/day to date in May.
These additional volumes are predominantly sold at the Columbia Gas Transmission index
(TCO) price with the average daily May pricing being US$6.58/dth, thereby allowing AXP to
take greater advantage of the strength in current natural gas prices.
1 1 dth is equivalent to ~0.855 Mcf.
2 Based on AXP’s average daily gas production of 8,297 Mcf/day for the month of April 2022.


Q UAR TE R LY A C TIVI TIE S R EPO RT
AXP Energy Limited | ABN 98 114 198 471
www.axpenergy.com
AXP has identified more than 300 additional wells across these specific leases which have not
been worked over since 2007. The Company therefore sees further significant upside for gas
production from these leases. AXP will continue to report on production volumes from this
area as more wells are worked over with the current program ongoing.
DOWNSTREAM RELIABILITY IMPROVEMENTS
As per the most recent Quarterly Activities Report (and as previously highlighted), ~74% of AXP’s
gas production, or ~6,160 mcf/day3 , is tied into the currently unstable third party midstream
and downstream infrastructure that has continued to regularly impact sales volumes. AXP has
been working closely with its midstream partner to improve system outage responses and
escalate procedures to remedy outages. In addition, there have been several operational
and engineering changes made to their system which is anticipated will result in fewer outages
in the current quarter. Notwithstanding, AXP does not intend to undertake any well workovers
in these leases until further reliability is assured.
COMMENT
Non-Executive Director Sam Jarvis said: “We are pleased with progress so far in the current
quarter and we are very focused on delivering materially improved margins. We are
confident that with the higher gas pricing, and by growing sales volumes in more reliable
sales channels, better overall performance can be expected. We will continue to update
shareholders more regularly as gains materialise.”
INVESTOR WEBINAR
The Company will host an investor webinar at 11:00 AM AEST on Wednesday 18 May 2022 to
provide further information on the matters mentioned in today’s announcement and an
update on other operations such as progress of the Elite Mining project in Colorado and
pending flow rates from the two drilled & uncompleted wells (DUCs) (see ASX release: 3
February 2022).
Managing Director Tim Hart and Non-Executive Director Sam Jarvis will discuss the Company's
recent quarterly results and other near-term value catalysts. Both Tim and Sam will be on hand
to address any questions submitted.